Archive for November, 2009

You’ll soon be hearing more about Taiwanese handset maker HTC. The company is making the leap from white label manufacturer to a brand in its own right. Marketing Week has the story.

For years HTC was best known as the maker of Windows Mobile handsets re-branded by carriers. Unfortunately, Windows Mobile has fallen far behind the iPhone and Google’s Android in mobile software innovation. For its own brand, HTC’s future probably lies more with Android as things look now. HTC’s new Android phones could equal (or better) the new Motorola Droid, assuming that HTC can use the latest version of Android that Google offers. (See this review.)

From enabling partners to enabling customers

HTC’s transition from white label manufacturer to a fully-fledged brand is a transition to a new level of business. In HTC’s case, it’s a transition from enabling mobile partners to one of enabling mobile customers directly. You can see this transition taking shape in HTC’s presentations, and in their advertising.

I may use the word “transition” to describe this change, but brand-wise, it is really a leap. Customers want that leap, too. They want the leap in value that brands can deliver.

HTC’s brand challenge

HTC’s brand challenge is the two-part challenge faced by all white label handset makers. First, HTC has historically been perceived as a maker of feature phones, where product features told the story. However, brands are about customer stories, not features. Specs count, but customers multiply.

Second, the handset itself is only one-third of the mobile phone experience. The handset is tied to the experience provided by the carrier, and by the brand of operating system. As its own brand, HTC must find a way to stand taller than the carrier brand and the brand of operating system in the eyes of customers. It cannot be “a Verizon phone,” nor can it be “a Windows Mobile phone” or “an Android phone.” It must command a context that is purely and uniquely HTC, a context that works wonders for customers.

A cultural transition leap

As a brand, a new HTC will emerge from the old. The transition leap from a manufacturing culture to a brand-enabling customer culture is not easy. Old barriers must fall; new freedoms must rise. From the looks of things, HTC has already made progress along this path. The real brand connection begins when the company and its customers are on the same page, writing it together. HTC’s task is to find that page, and begin a new book.

From “handset maker” to “computer maker”

The “handset” market died in 2007 when Apple redefined the mobile world with the iPhone. The iPhone is not a “handset.” It’s an amazingly powerful computer that fits in the hand—and makes phone calls. It’s the most user-friendly computer ever designed, and now boasts 100,000 apps. For HTC to succeed as a brand, its products cannot be “handsets.” They must be computers. Indeed, they must be better computers (for the customer) than the iPhone. To reach this brand level HTC cannot simply “think outside the handset.” As a brand, HTC must live outside the handset, in a new customer context.

From product to platform

As HTC builds out its brand, the nature of its products will change. They will cease being “products” per se and will grow into platforms for the HTC brand. Building on these platforms, HTC can deliver multiple layers of value direct to customers.

Mobile brands are now platforms for customer-driven applications. The challenge is not “How many features can we offer?” The challenge is how to enable 110% of the customer. Brands need that extra 10%. Brands are agents of discovery; they pull customers to richer worlds. A strategy canvas can help.

Brand deliverables

HTC’s Sense UI is a strong step towards personalizing the mobile phone experience. It certainly demonstrates HTC’s ability to work with the underlying OS to extend the user experience within an HTC brand vision. At a deeper brand level, HTC will need to offer highly engaging apps exclusive to HTC customers. As a brand, HTC is in the app business. The apps will build the brand in ways that hardware cannot. (For more on HTC Sense, see this highly informative interview (video).

Toward a new context of customer

As a brand, it’s entirely within HTC’s power to create a new context of mobile customer. In this context, what the phone does is less important than what it enables customers to do, and to be. As a handset maker, HTC was shipping devices. As a brand, it will be shipping culture.

Brands yearn to operate at the highest realms of context, but even the mightiest brand can be tripped up by a lowly bug. Verizon’s new (and highly-publicized) Droid phone is a case in point. Featuring Google’s slick Android 2.0 operating system with a handset by Motorola, Droid is getting rave reviews as an emerging competitor to the iPhone.

The camera works poorly for 24.5 days, then works properly for the next 24.5 days. This is based on the improper use of a timestamp by the focusing code, a strange cause to be sure.

Recently the fuzzy photos suddenly disappeared, leading some to believe that Verizon issued an unannounced software update over its mobile network. Or, it may be that the next 24.5 day “good” cycle kicked in.

Lowly bugs can be big brand opportunities

If Verizon wants to be a brand that takes care of its customers, then the time is ripe to announce a formal fix. Show customers that the Verizon brand has their back.

Herewith is Part III of my infamous brand quotes. As in Part I and Part II, my goal is to separate value-based brands from brands cast as illusions, or brands reduced to stylized sales stimulants. Today many brands are often their own worst enemies, desperately creating make-believe when they should be creating customers. (Hey, is that a quote?)

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In marketing, customers are the target. In brands, customers are the core.

The traditional marketing approach tends to separate the “producer” from the “buyer,” as if they’re separate species, with the producer usually fishing for customers using the brand as a lure. In contrast, the brand approach is holistic, with makers and customers joined in a common core. The brand model is a model of value co-creation, instead of a model of selling. Rather than “target” customers, brands co-create value with them to grow the common core. When customers buy the product they “buy themselves” through the brand.

Within the common core brands should be dynamic, vibrant and visceral. A model for this common core was developed eons ago. Who might have the brand advantage now?

A brand should be larger than life—but never larger than its customers.

Mediocre brands play it safe and copy one another, using the same copy machine. A brand that’s larger than life breaks the bounds of convention—and scraps the machine. It breathes new life into its customers, in a new context that disrupts the old. It takes its customers with it—as equals—so they can fuel one another on their shared brand journey.

A brand that’s larger than life makes contributions to culture. It needs headroom for itself—and its customers—to grow. Smaller brands make contributions to spreadsheets.

“Brand awareness” refers to the brand, not to the customer

The conventional definition of “brand awareness” is that it’s the degree to which people know about a brand and what the brand stands for. However, “brand awareness” has a far deeper meaning for the brand itself. We can think of brand awareness as the brand’s own awareness of its value potential: how the brand can make a difference and lead its customers to a richer life.

A brand is “aware” when it sees the future through its customer’s eyes. The first step to brand awareness is to ask the primordial brand question: “What is holding our customers back?”

When brands are in it for the money, customers will be in it for the price.

Every brand defines the terms of its engagement. When a brand exists solely as a stylized sales stimulant, created to monetize a product at a maximum price, customers are not part of the brand. The brand positions them as tools.

Customers may respond by de-monetizing the brand. They accept the brand for what it is—a gaudy act on a commodity stage—and shop on price. Instead of creating customers, the brand has created deal-seekers—the worst outcome possible.

To dethrone a brand icon, create an iconoclastic customer

When competing against a brand icon, don’t try to out-icon the icon. Your best bet is to dethrone the icon by creating a thoroughly iconoclastic customer, one whose new world excludes the old. You radically change the brand topography by changing the entire context of the customer—and the category. This is precisely how iPod/iTunes crushed CD’s and reinvented the music industry.

Today’s “luxury brands” come in two flavors: the icon, and the stereotype.

If you visit an “authentic” luxury shop in an upscale shopping area, telling your driver to cool it for a few hours, you can experience the brand as it was intended. On the other hand, if you drive 50 miles to the “factory” version of the same brand in an outlet mall, you will experience something completely different. The luxury brand has been reduced to a stereotype–typically the logo writ large, and writ everywhere.

The luxury stereotype flatters the bottom line, but never the brand. It transforms the brand into a “deal.” That’s the last place a brand wants to be.

The iPhone is such a powerful platform that it’s creating new markets every day. Is the iPhone a platform for interactive storytelling for children? Absolutely. Just check out this video of the “Phone Book” from Mobile Art Lab in Japan. (Mobile Art Lab site is in Japanese.)

A recent Skype update surprised many Firefox users by installing an unwanted add-on called the ‘Browser Highlighter.” Users report that the add-on slows computer performance and cannot be uninstalled using regular Firefox browser tools. Read user comments here. Some are irate, to put it mildly.

The add-on does not do the Skype brand any favors. Skype is owned by eBay, but is being spun off.

RoughlyDrafted Magazine has an interesting overview of some major differences between Google’s brand strategy for Android and Apple’s brand strategy for the iPhone. These strategies play out in the world of customers, of course, but also in the world of carriers, who are the primary gatekeepers in the mobile arena.

Android as the “anti-brand” to the iPhone

In broad brushstrokes the RoughlyDrafted piece reveals two contrasting brand strategies. When you read about Google’s strategy for Android, be prepared for a brand that happily cedes its identity to carriers. It’s as if Android is the “anti-brand” to the iPhone, providing brand power to carriers, conceivably at Apple’s expense. It would seem that Android’s business model requires it.

That was quick. Palm Pre and its WebOS operating system were launched in June, 2009 as a direct competitor to the iPhone. Six months later, declining sales have cast a pall over the brand’s future. One analyst calls it “a fading brand.”

As a fading brand, carriers are likely to see better returns on their promotional and advertising dollars with other vendors…WebOS has negligible smartphone OS share, 0.2 percent per Gartner estimates, and is unlikely to attract any meaningful third-party application support. Palm has bet the farm on webOS and there is a real possibility that they may not achieve critical mass.

When you’re in a market with highly aggressive innovators (like Apple’s iPhone and Google’s Android), ruled ultimately by powerful third-parties (like the carriers), the margin for error in brand strategy is as thin as a sim card.

One of the perennial problems in business is that over-exuberant marketing claims can come back to haunt the brand. Essentially, marketing writes checks that the brand can’t cash. When product or service claims can’t be substantiated, or may be seen as misleading, it’s the brand that pays the price. Brand trust—the gold standard of customer relationships—often takes the biggest hit.

Baby Einstein creates a brand trust headache for parent Disney

The New York Timeshas the story of how the esteemed Disney brand is taking measures to regain brand trust after over-aggressive marketing by its Baby Einstein subsidiary began to take a toll on the Disney brand itself. Disney acquired Baby Einstein in 2001. Baby Einstein’s advertising initially claimed educational benefits from its videos and DVD’s made for infants and toddlers. The claims resulted in a citizen’s group filing a complaint to the FTC alleging deceptive advertising. The FTC eventually dismissed the suit, in part because Baby Einstein scaled back its educational claims.

Disney offers a full refund

To help restore confidence in both the Baby Einstein and Disney brands, Disney has announced a full refund for Baby Einstein videos/DVD’s purchased within the last five years. Disney calls this “The Baby Einstein™ DVD Upgrade / Moneyback Guarantee.” You can read the details in the Participation Guidelines.

The importance of brand due diligence

Any M&A activity calls for brand due diligence, an in-depth assessment of the strategic fit between brands. Brand due diligence entails a close review of brand values and brand vision, and how a brand works to create brand trust. When Disney acquired Baby Einstein in 2001, a program of brand due diligence might have uncovered potential brand risks inherent in Baby Einstein’s marketing claims. The Disney brand might have been spared subsequent public disputes with citizen groups and academic institutions—and a large refund.